By Chinedu Okafor
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has cautioned that Nigeria’s power sector reform must be seen as a gradual, long-term process rather than a quick fix.
Speaking on the challenges confronting the sector, Yusuf explained that its complexity, political economy constraints, and institutional weaknesses make progress incremental. He warned that without decisive structural reforms, improved governance, and fiscal discipline, the current trajectory will remain unsustainable.
Despite years of reform attempts, the sector continues to grapple with deep-rooted financial, structural, and governance challenges. These include tariff distortions, weak investor capacity, transmission bottlenecks, and a persistent liquidity crisis across the electricity value chain.
Yusuf highlighted the inability to implement a fully cost-reflective tariff regime as a major stumbling block. He noted that political sensitivities and recent macroeconomic reforms—such as foreign exchange unification and fuel subsidy removal—have entrenched subsidy dependence, widened financing gaps, and intensified resistance to tariff adjustments.
“Without cost-reflective pricing, the sector cannot generate sufficient liquidity to sustain operations or attract new investment. The resulting subsidy burden has forced government to repeatedly intervene financially, transferring inefficiencies onto the public balance sheet,” Yusuf said.
He revealed that sector debt has now risen to about N4 trillion, a level he described as fiscally unsustainable without deeper structural corrections and improved transparency.
To address these challenges, Yusuf advocated for a balanced approach: short-term government support combined with medium- to long-term structural reforms. He stressed the need for rigorous audits of outstanding claims, stronger oversight mechanisms, and transparent subsidy management to prevent abuse similar to Nigeria’s fuel subsidy regime.
He urged government to adopt a phased transition toward cost-reflective tariffs, with targeted social protection for vulnerable households. This, he said, must be backed by strong governance frameworks to improve debt verification and financial settlements.
Yusuf also called for urgent reforms in the distribution sector, including recapitalisation, technical upgrades, and loss reduction. On transmission, he suggested exploring concession models for the Transmission Company of Nigeria (TCN) to boost efficiency and attract investment.
Finally, he emphasised the importance of decentralisation and renewable energy adoption. Encouraging state-level initiatives, independent power projects, and renewables, he argued, would ease pressure on the national grid. Government support, he added, should be time-bound and linked to measurable reform milestones.